ALU latest to cash in on Chinese 3G roll-out

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ALU latest to cash in on Chinese 3G roll-out

By CAROLINE GABRIEL

Published: 24 March, 2009

READ MORE: Alcatel-Lucent

China comes to the rescue of struggling mobile equipment makers again, and this time Alcatel-Lucent is the beneficiary of China Unicom's accelerating roll-out of W-CDMA/HSPA networks.

While market leader China Mobile has reined in its capex for 2009 a little, following a major splurge on TD-SCDMA last year, Unicom is gearing up to catch up in 3G. It has already gone live with networks supplied by Huawei and Ericsson is lined up to cover 15 provinces with 3G and to upgrade and expand GSM systems. Now ALU, which has cited Chinese opportunities as a key justification for staying in the cellular business, has been chosen to deploy 3G in 14 provinces.

The contract was won by ALU's joint venture with the Chinese state, Alcatel-Lucent Shangai Bell, and covers 10 provinces in which the company was already supplying GSM, plus four new ones. Its first deployments of W-CDMA for Unicom will be completed in May in the cities of Tianjin, Baoding, Wenzhou, Taizhou, Guiyang and Guilin.

Financial details were not disclosed, but Unicom plans to invest CNY100bn ($14.6bn) in 3G in total in 2009 and 2010. Huawei and Ericsson have about 30% of the phase one deal apiece, while Nokia Siemens is supplying 11 provinces. ALU also won the largest share of China Mobile's phase two tender for TD-SCDMA, via its joint venture with Datang Mobile. It stands to do well in the China Telecom CDMA2000 contracts too, given its leadership in CDMA platforms.

Also doing well from the Chinese capex boom is ZTE, which announced a 32.5% leap in 2008 net profit, which hit $239m, on revenue up 27.4% to $6.4bn. It also secured a $15bn credit line from the China Development Bank to fund overseas expansion. In 2008, ZTE's domestic business grew by 19% to $2.5bn while non-Chinese operations were up 33.5% to $3.9bn. Main growth areas were GSM, W-CDMA, FTTX and optical transmission.